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We are a retired couple, 65 and 63 yrs old, not working,

Second opinion] We are...

Second opinion] We are a retired couple, 65 and 63 yrs old, not working, buying a new home. The home we're buying is $50,000 more than the home we're selling. Current income from pensions and SSI is approximately $78,000. Are we better to look for conventional loan or, use our tax deferred savings to complete the purchase?

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

We are concerned about being pushed to a higher tax bracket by using tax deferred accounts.

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Answered in 1 hour by:
3/25/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,692
Experience: Taxes, Immigration, Labor Relations
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In 2018 - you are 12% tax bracket - up to taxable income $77,400

Your estimated taxable income is ~ $50k - so all you need to have additional $25k distribution - which still will be in 12% tax bracket

If you take distribution a little more - that part will be in 22% tax bracket.

In this case - you will only need about $20k - $25k in additional funds for less than a year - and will be able to cover that debt at the beginning of 2019 by taking another distribution.

I think you may avoid a conventional loan and additional fees related to approval...

Also - if you make a cash offer - without mortgage approval contingency - your agent might be able to negotiate smaller price.

So far - you really need relatively small amount and for short period.

I would try to avoid taking a loan.

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